GWP ROI Calculator
Is a free gift actually cheaper than a discount? Run your numbers and find out.
Every gift-with-purchase promo is a bet: give away a product so shoppers spend more. This calculator prices that bet with your store's own numbers, then puts it head-to-head against the alternative most merchants reach for first: a discount. The math usually isn't close, because a gift costs you wholesale while the shopper values it at retail. A discount costs you face value, every time.
The same incentive as a discount
To hand shoppers the same — of perceived value with a discount code, you give up — per month in margin. The gift delivers it for —. Running a gift instead of a discount keeps — per month in your pocket.
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How the Math Works
The model is deliberately simple, and every assumption is visible:
- Stretched orders. Orders below your threshold, times your stretch rate. These are the shoppers who add one more item because the progress bar says they're close to a free gift.
- Incremental revenue. Each stretched order is assumed to grow from your AOV to the threshold. If your AOV is $195 and the threshold is $250, a stretched order adds $55. Carts that start further below the threshold stretch less often but add more when they do; the AOV-to-threshold gap is the middle of that range.
- Gift cost. Everyone who qualifies gets the gift: the stretchers plus the orders that were landing above your threshold anyway. Gifts are costed at your cost, not retail.
- Net gain. Incremental revenue times your gross margin, minus gift costs, minus $19 for the app.
The discount comparison prices the counterfactual: delivering the gift's retail value as a code ("$15 off when you spend $75") costs you the full face value on every qualifying order. The gift costs you wholesale. That spread, times your monthly redemptions, is the structural advantage of gift-with-purchase, and it's why GWP campaigns protect margin in a way discounts can't.
These results are directional planning numbers, not a forecast. The honest next step is a two-week campaign measured against a no-campaign baseline; here's how to measure it without guessing.
Frequently Asked Questions
Why is a free gift cheaper than a discount?
A gift costs you its wholesale cost but the shopper values it at retail. A $34-retail gift that costs you $9 delivers $34 of perceived value for $9 of real cost. A $34 discount delivers $34 of perceived value for $34 of real cost. Same incentive, about a quarter of the price.
What stretch rate should I assume?
The stretch rate is the share of below-threshold orders that add items to reach your gift threshold. With a visible cart progress bar and a threshold set 20 to 30 percent above AOV (how to pick a threshold), 10 to 20 percent is a reasonable planning range. Start conservative and replace the estimate with your own campaign data after two weeks.
Is this calculator's result guaranteed?
No. It is a directional planning model built on your inputs and stated assumptions, not a forecast. Real results depend on your catalog, traffic, gift appeal, and how visibly the promo is merchandised.